EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0914915
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Hydromech Pty Ltd applied for a TCO in respect of certain direct drives on 05 May 2009.
Instrument
TCO No 0914915 was made on 24 July 2009. It declares that those certain direct drives are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0914915 is taken to have come into force on 05 May 2009.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901 was enacted to provide a comprehensive framework for the regulation of customs and excise, including the imposition and collection of customs duty. One of the mechanisms introduced to provide relief on certain goods is the Tariff Concession Order (TCO) scheme, which allows for the reduction or elimination of customs duty on specific goods under certain conditions. This scheme was designed to address the problem of high customs duties on imported goods that do not have Australian-made equivalents. Enacted by the Australian Parliament, the Act aims to facilitate international trade by reducing the cost of imported goods where local production is not viable. The policy objective is to encourage the importation of goods that are essential for industry or consumers, thereby promoting economic efficiency and consumer choice. The explanatory statement for Tariff Concession Instrument No. 0914915 clarifies the process and criteria for making such concessions, ensuring that the application and granting of TCOs are transparent and subject to public consultation where necessary.
Scope and Application
The Customs Act 1901, as amended, provides for the establishment of Tariff Concession Orders (TCOs) under Part XVA, which are administered by the Chief Executive Officer of Customs. This legislation applies to applications made by any person seeking to have a lower rate of customs duty applied to specific goods, provided these goods are not among those listed in section 269SJ of the Act, which cannot be subject to a TCO. The Act applies to goods that are not produced in Australia in the ordinary course of business, as determined under sections 269C, 269D, and 269E. TCOs are subject to national application across Australia, aligning with the broader customs and tariff regime established under the Commonwealth. There are no exclusions, exemptions, or thresholds specified within the primary text of the Act itself; however, the scope and specifics of the TCOs can be further defined through subordinate instruments, such as regulations or orders, which may include detailed criteria and procedures for applications and assessments.
Key Provisions
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0914915, introduces a mechanism through which the Chief Executive Officer of Customs (CEO) can make Tariff Concession Orders (TCOs) (sections 269F, 269C, 269B, and 269P(3)). These orders provide for a lower rate of customs duty on specified goods. The instrument in question, TCO No. 0914915, applies to certain direct drives and specifies that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%.
Under the Customs Act, an applicant must satisfy the CEO that the goods in question do not have substitutable goods produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods the subject of the TCO application are subject to the prescribed tariff concession. In this case, Hydromech Pty Ltd applied for the concession on 05 May 2009, and the CEO issued TCO No. 0914915 on 24 July 2009 after being satisfied that no substitutable goods were produced in Australia.
The obligations imposed by the Act on the CEO include publishing a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice. The TCO is taken to have come into force on the date the application was lodged, 05 May 2009 (subsection 269S(1)). Importantly, the TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person in respect of anything done or omitted before the date of registration.
Failing to comply with the requirements of the Customs Act or the regulations could result in various civil or criminal penalties. While specific offences and penalties are not detailed in the explanatory statement, the general provisions of the Customs Act 1901 provide for significant penalties, including fines and imprisonment, for breaches. The maximum penalties can vary depending on the nature and severity of the offence, but they are designed to ensure compliance with the Act’s provisions regarding customs duties and tariff concessions.